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Beating the Street (平装)
by Peter Lynch, John Rothchild
| Category:
Personal finance,Investing, Personal wealth, Self help |
| Market price: ¥ 168.00
MSL price:
¥ 158.00
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MSL rating:
 Good for Gifts |
| MSL Pointer Review:
A well-written, highly accessible investment sourcebook from one of the greatest investors of our time. |
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AllReviews |
1 Total 1 pages 10 items |
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Anise C. Wallace (The New York Times) (MSL quote), USA
<2007-01-12 00:00>
Mr. Lynch's investment record puts him in a league by himself. |
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Mike Fleming (MSL quote), USA
<2007-01-12 00:00>
This is one of the "must read" books for anyone wanting to invest well, and gets 5 stars for that reason only. It is by and about Lynch and his legendary carreer at Fidelity's Magellan Fund, and the period Lynch knocked the cover off the ball hitting home run after home run for a long string of years.
How did he do it? Well, several other reviews point out the difficulty of extracting Lynch's secret formula, and they rightly describe the lack of formulaic presentation. If there was a fabulous book on Lynch instead of this autobiographical one, I might put it on the "must read" list instead. There is not (yet, maybe Lowenstein will grace us with one?). However, too many fail in investing by looking for instant-coffee recipies that any boob can implement from the couch. If it was that simple, everyone would be rich. Success takes work and in-depth understanding of some, probably simple, strategies that ordinary investors can learn. In fact, investors who focus on fundamentals of the sort described by Lynch, & stay tuned out of the frenetic trading centers' "action," are likely to increase chances of success. The real beauty of Lynch's book is the myriad of different strategies, one or a few of which each of us can learn and implement as our investing "sweet spot."
Lynch covers a series of investment decisions in some detail. The detail is not uniform from company to company, position to position, making comparison of his formula difficult between investments. And he does not summarize his formula anywhere in the book. This oversight (which may be intentional to more quickly drop the instant-coffee addicts) leaves it up to the reader to digest the material and extract the essential focus of the master. I suggest a relaxed, 3 part method to do the extraction:
1) read the whole book (its easy reading), then set it down for a week or so.
2) read it a second time, pencil or highlighter in hand, and mark where you spot formulaic focus you can implement.
3) read it again in 6 months or a year, and repeat #2. This time around, with the aging of the first 2 readings, you will be surprised at how the formulae stand out. You will "see" more of what Lynch describes, and take your understanding of the master's strategic vision to a new and satisfying level. Not all examples will give the same level of insight to the master's strategies, so don't strain to make Lynch's magic stand out on every page. It is really only about what you can see & replicate. Even one good trick, well understood, will be worth the effort for your invesment results. If you can find 2 or 3 good tricks, like I did, you are on your way to richer success.
I have read this book at least 5 times (so far), and I get a firmer understanding of Lynch's myriad strategies each time. As a master of the game, and with a mountainous pile of cash demanding a high yield, Lynch needed many strategies to keep out-distancing all the averages. He did just that. Although a cookbook would be easier to put into use, it probably wouldn't work as well, as it wouldn't require depth of understanding. Patience is the key to implementing this important work.
Beating the Street stands among others on the "must-read" list:
- The Intelligent Investor by Benjamin Graham (ignore the mathematical formula, but savor the stuff on perspective & margin of safety; another book that should be re-read periodically);
- Common Stocks and Uncommon Profits by Phil Fisher (ditto on the re-reading);
- Conservative Investors Sleep Well, also by Fisher; out of print so watch here on Amazon for a clean used copy;
- Buffett, the Making of an American Capitalist by Roger Lowenstein
- The Essays of Warren Buffet: Lessons for Corporate America by Buffett & Cunningham (great compendium of Buffett's own analysis of corporate governance, accounting and other issues investors need to watch);
- When Genius Failed, the Rise & Fall of Long Term Capital Management by Roger Lowenstein. This is the sort of post-mortem on investing mistakes that every investor needs to guard against, and all the more important because it was a cadre of smart guys who lost their butts;
- Academic papers of Terrance Odean & Brad Barber, finance professors at UC Berkeley & UC Davis, respectively, see their websites for links to papers about investor mistakes to avoid.
Good Luck on the Street! |
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Bruce Gilliz (MSL quote), Canada
<2007-01-12 00:00>
When Peter S. Lynch speaks, wise investors will listen. This book covers the famous fund manager's career at the helm of Fidelity Magellan from 1977 to '90, and post career into '92. It's far more introspective than One Up On Wall Street and it was no doubt meant to be for this purpose. For example, there isn't nearly as much fundamental principles for stock picking outlined in this book as the former. My belief is that the reader would do best by reading One Up On Wall Street first and follow up with this title, as its the newer of the two, regardless.
Peter's style of writing (with John Rothchild) is no-nonsense and easy to take in. To my knowledge three books have been published by the duo and all three have been entertaining and never dry. The reader can comfortably take in some very important stock-picking principles from one of the greats without feeling intimidated at any point. I think this is a sign of a well written book that covers a topic that isn't child's play (unless you like playing with money).
And although this book doesn't cover nearly as much technical information as the first, it still offers a lot of tasty tidbits for stock pickers. I made plenty of notes while reading Beating The Street, and I'm confident that I'll be well served by doing so. Peter reiterates many of the guidelines he mentioned in his first best-seller, such as scrutinizing company earnings and the balance sheets, and he gives his wise opinion of picking bargain stocks that have lower P/Es than their growth rates.
Overall, this title definitely deserves four stars, and his first book deserves at least five stars. Lynch and Rothchild have authored several investing books that will stand the test of time. You'll sleep better with your investment decisions by having these valuable classics in your collection. |
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Bruce Fenton (MSL quote), USA
<2007-01-12 00:00>
Peter Lynch writes well and this book has some classic wisdom that lets you into his mind. One drawback is that Mr. Lynch may sometimes forget just how smart he is and tends to over simplify some aspects of investing analysis that come to him naturally. For example, asking a clerk at a retail store what sells well is a technique Mr. Lynch will use on occasion to evaluate a stock. However, it's key to note that he also has a great deal of resources in the form of advanced technology and research tools, not to mention personal genius.
This book is highly recommended and can be a great tool for a business owner or investor but I'd caution most non-professionals on reading this and thinking they can become the next Peter Lynch with little more than a computer and a brokerage account. Good book, thanks Mr. Lynch. |
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An American reader (MSL quote), USA
<2007-01-12 00:00>
I had read this book back near the beginning of the real boom time (sometime in the mid-90s), and rereading it now made me wish that I had paid much closer attention back then. Even though this book is extremely optimistic about the stock market and was written well before internet mania, there are probably 50 different sentences sprinkled throughout the book that would have kept me out of the market during the next few years and saved me a lot of money had I remembered any of them. When this book is slow, it can be really slow. But when Mr. Lynch does hit gold, it's the motherload. Indeed, the last three pages of the book, "20 Golden Rules," are probably worth the purchase price alone (particularly since you can almost certainly buy this book used for less than $5 at any time). The last third of the book, where Mr. Lynch gives advice on investing in a number of different industries, ranges from incredibly useful to skippable, depending on what you already have some knowledge about.
I have two particular criticisms of this book. One is that, although Mr. Lynch's tales of his days running Magellan make it clear that he was selling only a little less often than he was buying, he doesn't give much advice about how to go about that side of things. Secondly, although the book starts off with the story of a group of elementary school kids who beat the pros, the rest of the book seems to contradict Mr. Lynch's implication that a 10 year-old can do this. Although this book is very readable, one can't help but come away with the conclusion that investing in stocks is hard (if you don't think so, you may living on luck). Mr. Lynch's main argument is that you don't have to be a pro to invest in stocks, but just about every story that he has about researching a stock includes him talking to the CEO of the potential investment at some point. I'm not expecting to be able to replicate that research technique.
Still, I'd highly recommend this book, and I look forward to reading his other well-known book, One Up on Wall Street. |
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An American reader (MSL quote), USA
<2007-01-12 00:00>
This is not a stand-alone text: it must be read in conjunction with One Up on Wall Street. Lynch emphasizes the long-term-investment outlook, and exemplifies the danger of replacing one dogma with another. He throughout insists that people should not panic in market drops; he points to the success of Magellan (and the market) in rebounding after the crash of '87. But between the two books, he also shows clearly how he determined that stocks were overpriced in '72 and '92, just before they indeed fell. The same signs abounded in '87, but Lynch doesn't accept responsibility for $4 billion in fund losses: these things happen, we are told, and the market did bounce back; just keep your cool. This is the problem with the long-term, anti-market-timing dogma that has arisen in the last decade: it allows people to excuse their own errors in judgment. Given what happened in '87, Lynch is probably doing a net service by telling people not to panic during market downturns; but, given how widespread "buying on the dip," despite questionable fundamentals, has become, he may have actually talked people into speculating. If, as conventional wisdom holds, stocks are the best long-term investment, then people won't worry too much about currently inflated prices. We'll know in a few years whether Lynch has done more harm than good. |
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M. Patton (MSL quote), USA
<2007-01-12 00:00>
My profession is writing, but my business is investing. With over 50 years of experience in the stock market and having made millions, I think I know what's up. Not only is this book definitive on stock picking, it is also fun and easy to read and the author's humanity comes right through. And the core message that you can do better than the fund managers (for a variety of reasons) is, from my own experience, true. Try Lynch's system: What worked for him, might work for you. Oh yes, by the way, this book is mainly a repeat and better version of his previous work and represents a more masterful and confident telling of the ways to beat the street. |
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J. Robinson (MSL quote), Canada
<2007-01-12 00:00>
I guess what I find funny is that some of the other reviewers say this book does not help. Having read the book I am really quite taken aback.
This is a wonderful book! This is a book written by real investment guru with a strong track record. His advice is solid.
In many ways I found this to be a very surprising book to read. What I found surprising was the degree to which Peter Lynch tries to think independently and look at the big picture. His advice is very practical and very down to earth. He follows his own instincts and does not follow other people's advice. He tries to follow social trends and go to malls and other places - where anyone can go - to get an idea about what product or store is hot and what is not. Then he investigates the financials of that "hot" prospect.
For example if he learns from his wife that a new store like the Gap or similar is suddenly full of shoppers and things are flying off the shelves, he will investigate the financials, cash flow, etc. If the stock is a "buy" he will not sell when it goes up 25%. He will set a price in his mind where he thinks the stock can go, say 200% or 400% higher. Then he will buy and hold until that occurs, holding the stock through volatile fluctuations. And he does that on his own. Once he can accumulate a number of multi-integer growth stocks, then the portfolio tends to take care of itself and small losers are easily written off.
A very good read. He talks about mutual funds and S&P type investments also.
Five stars.
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He Xuan (MSL quote), Taiwan
<2007-01-12 00:00>
Much of what Peter Lynch says in this book is perhaps fairly straightforward for a professional equities analyst - and some of it isn't. For the novice he explains in detail his rationale behind stock picks for Magellan, and for the "expert" he blows away a few myths on ratios, technical analysis and other mechanical means to asses stocks. All the way through the book he reiterates that fundamental analysis is what he based his stock picks on, and that reasonably interested personal investors can do it as well if not better than the professionals. There are no gimmicks, and no "theory" (cf. Soros on Soros), just an explanation of how one of the best fund managers of all time did his homework. |
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Gregory (MSL quote), USA
<2007-01-24 00:00>
This book, written in 1993, simultaneously comes at the end of Mr. Lynch's career in money management and the beginning of a long sprint in the broader stock market, largely fueled by tech/internet stocks. In any period, one can expect 1 of 100 money managers to far outperform both his or her peers and the broader market by chance. Mr. Lynch was that one money manager.
Mr. Lynch starts the book by turning investing into a game. Although his method was subtle (using an example of grammar school kids picking stocks), the implications are profound. Investing does share some resemblance to many games we play in life, and one of the Great Money Masters, the fictitious 'Adam Smith' readily admits this in his classic book on investment, The Money Game.
However, Mr. Lynch takes things one step beyond the game, and as the book's title hints, he turns all investment activities into a competition. In so doing, he pits the small investor against the institutional Players, and as a result, sets up the naive reader to walk a well-trodden path littered with sorrow and the bones of many foolish investors.
Granted, 'Adam Smith' once said, "The Players aren't smarter than you. They just have more information", and there also is a certain level of truth to Lynch's assertion that the Little Guy can outperform the Big Boys. However, Lynch fails to disclose one important and critical difference.
I believe it was Hemmingway who said, in response to Fitzgerald's observation that the rich were not like the ordinary schmuck, that "Yes, I know. They have more money." Something frightfully similar can be said of the key difference between the Little Guy and The Players, but with one critical insight: The Players do not merely have more money, they have a lot more of Other People's Money. That in essence is the fundamental difference between The Players and the Little Guy, who must wager his (or her) own hard-won funds in order to play the Grand Game- the stock market.
Needless to say (but will be said anyway), the consequences of one's actions weigh heavily on one's shoulders when one's own money is at stake, but really aren't felt when Other People's Money is on the line. The Players play with Other People's Money, but you, dear investor, play with your own hard-won earnings. That said, the intelligent investor must ask herself, 'Do I really want to play with my money?'.
Beating the Street rests heavily on this undisclosed truism and a host of faulty assumptions. The book really is a sales pitch to buy stocks and to participate as much as possible in stock mutual funds. To that end, Mr. Lynch places before the reader a number of questionable arguments. Here are just two:
First, perhaps the most flawed argument of the book is that the small investor, upon retirement, will spend more than she earns in investment income. This is stated as a bona-fide fact when in reality, it is a generous assumption. From this assumption, Mr. Lynch then argues that one should invest in stocks and use some portion of the capital appreciation in addition to the dividend income for the purpose of meeting one's spending needs. He then fortifies his argument by citing inflation and emphasizing its ability to erode fixed income.
The facts are 1) how much investment income you will need is determined by how much you plan to spend, 2) many people choose to work either part-time or full-time after retirement (either out of necessity or desire), and thus have some supplemental income, 3) though the general historical trend for stock prices has been 'up', there is nothing that says that stocks have to go up, and finally 4) inflation can adversely affect stock prices (and have actually done so in the past). Lynch invokes the inflation argument when trashing bonds, and abandons it when touting stocks, even though inflation acts on both. Nor does his idealized comparison of stocks vs. bonds on pages 52-56 take into account taxes and transaction costs incidentally.
Second, on page 69, Mr. Lynch boldly says that, "If you plan to to stick with a fund for several years, the 2-5 percent you paid to get in will prove insignificant". This last statement may actually be worse than his first (of many) flawed arguments, for the following reason: the money lost to the load fails to compound at whatever investment rate of return, and over long periods of time, the difference between what you committed and what gets actually invested grows- and this is before we even consider the effect of annual expenses.
These and other flawed but superficial arguments for stock investing make for very difficult reading. Apart from the gross argumentative errors, the book presents many of Mr. Lynch's reminiscences of a stock market long gone. However, there are some useful hints in the book, most likely put there by Mr. Rothchild, but they are far outnumbered and over-shadowed by Mr. Lynch's deceptive pitch to buy stocks.
(A negative review. MSL remarks.)
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1 Total 1 pages 10 items |
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